ISLAMABAD – The federal government plans to collect Rs20 billion in revenue next fiscal year by imposing an 18% General Sales Tax (GST) on imported solar panels and photovoltaic cells. This tax move suggests authorities expect solar imports to exceed Rs110 billion in 2025-26, despite concerns from the energy sector.
Finance Minister Muhammad Aurangzeb announced the tax during his budget speech, stating that the move aims to support domestic manufacturers and ensure fairness in the market. He noted that local solar panel assemblers already face the same tax, while imports had remained tax-free until now.
Federal Board of Revenue (FBR) Chairman Rashid Langrial told a parliamentary panel that the GST would help create a level-playing field. He argued that cheaper imported panels had long undermined Pakistan’s solar industry, and the new tax could boost local production and investment.
Meanwhile, energy experts and solar businesses warn that the tax could slow down the country’s fast-growing solar adoption, especially among households and small businesses. With electricity prices rising sharply, many had turned to solar power as an affordable alternative.
Pakistan’s solar capacity has more than tripled in under two years, reaching 4.9GW by March 2025. Solar now contributes over 14% of the country’s power supply — a massive leap from just 4% in 2021, according to think tank Ember.
Nevertheless, officials insist that the demand for solar power remains strong. The tax aligns with IMF-guided reforms aimed at broadening the tax base, reducing energy subsidies, and supporting long-term fiscal stability.